Big Rock Brewery Income Trust
TSX : BR.UN

Big Rock Brewery Income Trust
BIG ROCK BREWERY LTD.

BIG ROCK BREWERY LTD.

May 11, 2006 16:39 ET

Big Rock Brewery Income Trust Announces 1st Quarter Results

CALGARY, ALBERTA--(CCNMatthews - May 11, 2006) - Big Rock Brewery Income Trust (TSX:BR.UN) (the "Trust") is pleased to report to Unitholders its unaudited consolidated financial results for the three month period ended March 31, 2006. These results reflect the consolidated operations of the Trust, Big Rock Brewery Ltd. and its wholly owned subsidiary Pine Creek Brewing Company Ltd.

Financial Highlights for the three month period ended March 31, 2006 compared with the same period for 2005 are as follows:

Net income for the quarter ending March 31, 2006 was $1,063,870 compared to $1,001,425 for the quarter ended March 31, 2005, a 6% increase due primarily to the increase in sales.

Net income per unit increased by 6% to $0.18 for the quarter ended March 31, 2006 compared to $0.17 in the same quarter last year. Units outstanding increased by 12,700 to 6,011,024 during the quarter.

Cash distributions declared to unitholders for the quarter ended March 31, 2006 were $1,982,967 or $0.33 per unit (2005 - $1,761,517 or $0.30 per unit).

Sales volume grew by 8% during the first quarter from 41,825 HL to 45,078 HL. These strong sale results are attributable to a rapid growth in Big Rock's private label and value beer business. Big Rock's premium products sales were relatively flat year over year.

In early March, selling prices were increased an average of 3% to mitigate increasing input costs particularly transportation and utilities. At the same time the selling prices of various Big Rock brands were harmonized.

For the quarter ended March 31, 2006, net sales revenue rose 5% to $8,319,702 from $7,948,540 in 2005. Year-over-year net revenue per hectoliter decreased by $5 reflecting the increase in sales of lower margin value and private label brands.

Cost of sales increased to $3,299,341 this quarter from $3,164,715 in the same quarter last year primarily due to the increase in production volumes. Year over year the cost of sales per hectoliter decreased by $3 per hectolitre from $76 to $73. Production efficiencies increase as Big Rock shifts its production to beer in cans vs bottles. As the first quarter is typically the slowest of the year, costs per hectoliter in the quarter are higher than the annual average of $71/HL.

Gross profit for the quarter was up $236,536 (5%) to $5,020,361 from $4,783,825 in the same quarter last year commensurate with the net sales increase.

Selling expenses for the quarter ended March 31, 2006 increased by $168,826 (7%) to $2,444,178 compared to $2,275,352 in the same quarter last year. This increase is entirely attributable to a non-resident brewer "cost of service" charge of $24/HL by the B.C. Liquor Distribution Branch. This is applicable as Big Rock no longer operates a B.C. brewery. Alberta and B.C are currently working on harmonizing the treatment of inter-provincial trade and commerce and Big Rock anticipates the same treatment in B.C. that B.C. brewers are accorded in Alberta.

Income tax expense for the quarter of $182,594 (2005 - $190,641) is comprised of $223,228 in current income tax expense less $40,634 in future income tax recovery. The income trust structure shelters approximately $5,586,894 of net income by shifting the tax burden to the unitholders and reducing the effective income tax rate from 34.55% to 14.55%.

Big Rock continues to enjoy good liquidity with $5,981,728 in cash and cash equivalents at quarter-end (December 31, 2005 - $5,722,465) after paying out cash distributions of $1,981,600 during the quarter ended March 31, 2006 (2005 - $1,759,437) and no long-term debt.

Cash provided by operating activities increased by $1,812,911 (185%) to $2,794,347 for the quarter ended March 31, 2006 from $981,436 in the same quarter last year. The increase arose primarily from decreases in accounts receivable and the future income tax provision.

Selected financial information follows:



Big Rock Brewery Income Trust
Consolidated Statement of Operations & Undistributed Income
(Unaudited)
Three months ended
March 31,
2006 2005
--------------------------
Revenue $ 8,319,702 $ 7,948,540

Cost of sales 3,299,341 3,164,715
--------------------------
Gross profit 5,020,361 4,783,825

Expenses
Selling 2,444,178 2,275,352
General & administrative 822,257 812,597
Amortization 507,462 503,810
--------------------------
3,773,897 3,591,759
--------------------------
Income before income taxes 1,246,464 1,192,066
--------------------------
Current income tax expense 223,228 29,273
Future income tax expense (recovery) (40,634) 161,368
--------------------------
182,594 190,641
--------------------------
Net income for the period 1,063,870 1,001,425

Undistributed income, beginning of period 11,670,413 12,705,745
Cash distributions (1,982,967) (1,761,517)
--------------------------
Undistributed income, end of period $ 10,751,316 $ 11,945,653
--------------------------
--------------------------
Net income per unit
Basic $ 0.18 $ 0.17
Diluted $ 0.18 $ 0.17



Big Rock Brewery Income Trust
Consolidated Balance Sheet
(Unaudited)
31-Mar-06 31-Dec-05
----------------------------
Assets
Current
Cash and cash equivalents $ 5,981,728 $ 5,722,465
Accounts receivable 2,238,986 3,848,397
Inventories 3,317,445 3,048,610
Prepaid expenses 244,437 150,685
----------------------------
11,782,596 12,770,157

Property, plant and equipment 28,891,071 28,615,246
Deferred charges and other assets 289,762 400,774
----------------------------
Total assets $ 40,963,429 $ 41,786,177
----------------------------
----------------------------

Liabilities and Unitholders' Equity
Current
Accounts payable and accrued liabilities 2,694,853 2,746,468
Income tax payable 558,119 489,679
Distributions payable 661,123 659,756
----------------------------
3,914,095 3,895,903

Future income taxes 8,019,533 8,060,167
----------------------------
Total liabilities 11,933,628 11,956,070

Unitholders' equity
Trust unitholders capital 17,995,802 17,872,741
Contributed surplus 282,683 286,953
Undistributed income 10,751,316 11,670,413
----------------------------
Total Unitholders' equity 29,029,801 29,830,107
----------------------------
Total Liabilities and Unitholders' equity $ 40,963,429 $ 41,786,177
----------------------------
----------------------------



Big Rock Brewery Income Trust
Consolidated Statement of Cash Flows
(Unaudited)
Three months ended
March 31,
2006 2005
Operating Activities
Net income for the period $ 1,063,870 $ 1,001,425
Items not affecting cash:
Amortization 507,462 503,810
Future income taxes (recovery) (40,634) 161,368
----------------------------

1,530,698 1,666,603

Net change in non-cash working
capital relating to operating activities 1,263,649 (685,167)
----------------------------

Cash provided by operating activities 2,794,347 981,436
----------------------------

Financing Activities
Distribution payments (1,981,600) (1,759,437)
Cash received on exercise of options 118,791 156,080
----------------------------

Cash used in financing activities (1,862,809) (1,603,357)
----------------------------

Investing Activities
Purchase of property, plant and equipment (783,287) (1,192,723)
Deferred charges 111,012 (255)
----------------------------

Cash used in investing activities (672,275) (1,192,978)
----------------------------

Net increase (decrease) in cash
and cash equivalents 259,263 (1,814,899)

Cash and cash equivalents,
beginning of period 5,722,465 2,093,695
----------------------------
Cash and cash equivalents,
end of period $ 5,981,728 $ 278,796
----------------------------
----------------------------


Big Rock is a regional producer and marketer of premium quality beers, headquartered in Calgary, Alberta, Canada. Big Rock's products are available in draught, bottles and cans. The Company also produces or distributes cider and cooler products. Big Rock products are marketed in seven provinces and three territories in Canada.


Contact Information

  • Big Rock Brewery
    Ken Barbet
    President & CEO
    (403) 720-3239
    or
    Big Rock Brewery
    Tim Duffin, C.A.
    Chief Financial Officer
    (403) 720-4473